Nita Dyeing and Printing Works Surat v. Gujarat Gas Ltd.
2006-09-01
RAVI R.TRIPATHI
body2006
DigiLaw.ai
JUDGMENT : Ravi R. Tripathi, J. Nita Dyeing & Printing Works, through its partner, is before this Court being aggrieved of an order of discontinuation of supply of gas dated 12.03.2006 passed by the respondents. It is prayed that, after declaring the same to be illegal, highhanded, arbitrary, unjust and unauthorized, appropriate writ, order or direction be issued. It is also prayed that the raising of monthly minimum offtake charges without supply of gas be declared to be unconstitutional. 2. The facts of the case are that the petitioner, a partnership firm, entered into an agreement, though it is referred to as an agreement, it is a contract, with respondent No.1 on 19.05.1998. It is also the case of the petitioner that the said agreement/contract was renewed from time to time and is in force till 31.12.2007. The case of the petitioner is that, 'to his sheer shock and surprise, respondent No.2 - Manager of respondent No.1 company addressed a letter to the petitioner in the late evening on 12.03.2006 intimating discontinuation of supply of gas on the ground that the petitioner was consuming the gas by bypassing the metering system. The petitioner, though requested the respondent to reconnect the gas supply by letter dated 14.03.2006, the respondent did not respond to the same and gave a vague reply dated 21.03.2006. The petitioner addressed another letter dated 31.03.2006 and repeated his request for inspection sheet and/or any other documents that may have been prepared by the officers of respondent No.1 company on 12.03.2006. The respondent company did not reply and did not reply till date. It is also the case of the petitioner that on 15.04.2006, the petitioner again made a request to the respondent company to restore the supply of gas with immediate effect within 24 hours from the receipt of the letter. The petitioner also invoked 'arbitration clause' at Clause No.14 of the contract and appointed/nominated its arbitrator and called upon the respondents to appoint their arbitrator as is required under the aforesaid Clause No.14. 3. The petitioner is aggrieved twofold, one that the supply of gas is discontinued and another the respondent company is raising bills for 'minimum offtake charges', non-payment of which is to result in disconnection. The case of the petitioner is that the petitioner having no other alternative, efficacious remedy, has approached this Court by filing this petition. 4.
3. The petitioner is aggrieved twofold, one that the supply of gas is discontinued and another the respondent company is raising bills for 'minimum offtake charges', non-payment of which is to result in disconnection. The case of the petitioner is that the petitioner having no other alternative, efficacious remedy, has approached this Court by filing this petition. 4. Mr.P.M.Thakker, learned senior counsel appearing with Mr.Zubin F.Bharda, for the petitioner emphatically submitted that the respondent company is the SOLE SUPPLIER of gas by pipeline in the city of Surat to consumers of all categories like domestic, commercial and industrial therefore, the functions of the respondent company are in the nature of, "public functions". Learned senior counsel submitted that the respondent company though not directly an agency or instrumentality of the State within the meaning of Article 12 of the Constitution of India, is certainly an 'entity' against which a writ is required to be entertained. He submitted that so far as invoking of arbitration clause is concerned, it is not in dispute the petitioner has placed notice dated 15.04.2006 at Annexure-H whereby, the arbitration clause was invoked. But then, he submitted that, since the petitioner firm is without the supply of gas since 12.03.2006, which has rendered its workers/employees jobless. He submitted that considerable number of people are affected by this act of the respondent company. He submitted that in the arbitration proceedings, only major disputes between the parties, viz. (i) whether the petitioner is guilty of having committed theft of gas, (ii) what amount is payable by the petitioner to the respondent company for the alleged theft will be decided. He submitted that the case of the petitioner is that neither the quantity nor the duration for which the theft is committed is ascertainable. He submitted that it is only in the nature of allegations, particularly qua the quantity and its value will be decided that too, after long drawn arbitration proceedings. The learned senior counsel emphatically submitted that the sole purpose of the petitioner to approach this Court invoking the discretionary jurisdiction is to find out an immediate solution to the problem which has arisen on account of the closure of the factory of the petitioner which has rendered considerable number of people unemployed.
The learned senior counsel emphatically submitted that the sole purpose of the petitioner to approach this Court invoking the discretionary jurisdiction is to find out an immediate solution to the problem which has arisen on account of the closure of the factory of the petitioner which has rendered considerable number of people unemployed. The learned senior counsel submitted that he has instructions from his client to agree to any condition, on which the Court may direct the respondent company to restore the supply of gas. 5. After the learned senior counsel for the petitioner completed his arguments, with this proposal, the learned advocate for the respondents was granted a day's time to take instructions from his client with regard to this proposal. Learned advocate for the respondent company on instructions from his client submitted that it is not possible for the respondent company to restore the supply of gas. 6. The Court then proceeded to hear the matter. 7. The learned senior counsel for the petitioner relied upon a decision of the Hon'ble the Apex Court in the matter of Zee Telefilms Ltd And Another v. Union Of India And Others, reported in (2005) 4 S.C.C. 649 . He emphasized on head note E wherein the Hon'ble the Apex Court was pleased to consider the question of maintainability of a petition under Article 32 of the Constitution of India. The Hon'ble the Apex Court is pleased to hold that, 'when the body against whom a writ is filed, is not a State, it does not mean that there is no remedy against such a body.' 'The remedy is available under ordinary course of law or under Article 226 of the Constitution.' (emphasis supplied) The learned senior counsel for the petitioner relying upon this last observation that, 'the remedy is available under ordinary course of law or under Article 226 of the Constitution of India', submitted that in the present case also, the respondent company is such a body, which even if not falling within the definition of the term, "State" or 'its agent or instrumentality', a writ is maintainable under Article 226 of the Constitution of India. 8. The learned senior counsel for the petitioner submitted that in this decision, the Hon'ble the Apex Court has referred to its earlier decision in the matter of Pradeep Kumar Biswas.
8. The learned senior counsel for the petitioner submitted that in this decision, the Hon'ble the Apex Court has referred to its earlier decision in the matter of Pradeep Kumar Biswas. He, therefore, relied upon the decision of the Hon'ble the Apex Court in the matter of Pradeep Kumar Biswas v. Indian Institute Of Chemical Biology And Others, reported in (2002) 5 S.C.C. 111 . The learned senior counsel emphasized the following observations made by the Hon'ble the Apex Court: " "State" - The question in each case would be: whether on facts the body is financially, functionally and administratively dominated by, or under the control of, the Government." The learned senior counsel submitted that in the present case, as submitted earlier, the respondent company is the 'sole supplier' of natural gas through pipeline to the entire city of Surat and thus, enjoys monopolistic status. The function discharged by the respondent company is in the nature of 'public function' and therefore, applying the test of 'functionally dominated', it can be said to be under the control of the Government and therefore, writ is maintainable. 9. The learned senior counsel for the petitioner also referred to the observations made by the minority, in the "dissenting judgment": "To be an authority, the entity should have been created by or under a statute and should be functioning with liability or obligations to the public." The learned senior counsel further emphasized that once the 'functions entrusted' are 'governmental' or 'closely associated therewith' by being of public importance or fundamental to the life of the people, the entity/authority/body has to be held to be amenable to the writ jurisdiction. Dated 02.09.2006 10. The learned senior counsel for the petitioner inviting attention to the facts of the case submitted that it was only in the year 1998 that the contract for supply of gas was entered into and the same is valid up to 31.12.2007. He submitted that inspection was carried out on daily basis, a report was prepared and 'consumption of gas', etc. was recorded.
He submitted that inspection was carried out on daily basis, a report was prepared and 'consumption of gas', etc. was recorded. He submitted that even on 12.03.2006, the officers of the respondent company had carried out some repair work, which is reflected from 'customer call/visit report', a copy of which is at Annexure-C. While inviting attention of the Court to the said document, the learned senior counsel submitted that it was between 11.00 to 12.00 (in the annexure it is not mentioned as to A.M. or P.M.) one Shri Pravin Patel from the respondent company had visited the factory premises of the petitioner and had carried out certain service which is referred narrated as under: "To carried out supply line plug/Valve d/s Blaind Installed" He submitted that 'nothing' is mentioned in the said report which indicate that the respondent company or its representative had any reason to suspect any such malpractice done by the petitioner. He submitted that even earlier, on 31.12.2005, the factory premises of the petitioner were visited by a team of the personnel of the respondent company who had prepared a 'Joint Calibration & Verification Report for Dual/Multi Variable Type Orifice, RPD, PD & Turbine Flow Meter.' He submitted report is at Annexure-J, collectively. In that report, in Clause 5, which pertains to, 'Calibration Readings', which is in tabular form, in part A, B and C in the remark column, it is mentioned - "Found OK". He submitted that after those tabular part A, B and C, there is a 'remark' which reads as under: "Overall Meter Performance Remarks: Meter found within acceptable limits." The learned senior counsel for the petitioner submitted that column 6 pertains to, 'Verification Carried Out'. He submitted that in that column, against item Nos.1, 2 and 3 it is, it is mentioned, 'Found OK'. Item No.4 is 'not applicable'. Item No.5 is again OK, Item Nos.6 and 7 are not applicable, Item No.8 and 9 pertain to, 'meter seal integrity and numbers' and, 'cabin seal integrity and numbers'. So far as meter seal is concerned old seal number and new seal number are mentioned, whereas, so far as cabin seal is concerned, only old number is mentioned. Item 10 again bears remarks, 'OK' and Item Nos.11 and 12 stated to be 'not applicable'.
So far as meter seal is concerned old seal number and new seal number are mentioned, whereas, so far as cabin seal is concerned, only old number is mentioned. Item 10 again bears remarks, 'OK' and Item Nos.11 and 12 stated to be 'not applicable'. The learned senior counsel submitted that this shows that the affairs of the petitioner were not found any way suspicious and therefore, the allegation of the respondent company that, 'the petitioner was found to have indulged in theft of gas', is to be examined and that too, with caution. The learned senior counsel further submitted that instead of giving any notice, the respondent company has taken an extreme action and has discontinued the supply of gas. He submitted that this is nothing but imposing 'economic death' penalty on the entire workforce and their family members of the petitioner, even before the matter is investigated. He submitted that the respondent company has already filed a criminal complaint before the learned Judicial Magistrate, First Class, which is already forwarded for investigation to the police. He submitted that the petitioner is not seeking any relief against that nor he has sought for any relief against that in any other forum. He submitted that let those proceedings goon in accordance with law. But then, he submitted that let the penalty of 'economic death' be not executed during the pendency of the proceedings, which are to take long time. The learned senior counsel for the petitioner submitted that it is not in dispute that agreement at Annexure-A does bear a clause of 'arbitration' and the petitioner do not hide the fact of having resorted to the same. But then, it is also equally true that, 'so far process of appointing the arbitrators and the umpire is not over.' He submitted that this is a relevant factor which is required to be taken into consideration in support of the submission of the petitioner that, 'even that mode, is to take time to adjudicate the dispute.' That being so, there are all the more reasons to entertain this petition and grant necessary relief by directing the respondent company to restore the supply of gas on such terms and conditions which may be deem fit by this Court.
Clause No.14 of the contract/agreement reads as under: "Arbitration : Any dispute or difference whatsoever arising out of this contract which is not settled by mutual consultation of the SELLER and BUYER shall be referred to two arbitrators, One to be appoint an umpire, in advance of their consideration of any point of dispute. Arbitration proceedings shall be held in accordance with the provision of the Indian Arbitration Act, 1940 and the rules made there under as amended from time to time. The venue of arbitration shall be Surat." The learned senior counsel for the petitioner submitted that except communication dated 12.03.2006, copy of which is at Annexure-D, the petitioner is not communicated anything about so called theft of gas, nor any details are given. He submitted that for the first time the details are learnt by the petitioner from Annexure-III produced along with affidavit in reply filed by one Shri Yogesh Dev, Manager - Legal on behalf of the respondent company. The learned senior counsel submitted that along with additional affidavit, the petitioner has produced daily data collection sheet at page Nos.125 to 347. He submitted that these documents are placed on record for the perusal of the Court and to demonstrate that, on daily basis, the respondent company was in know of the affairs, viz. supply of gas, consumption thereof and its record. He submitted that during this entire period, i.e. right from 1998 till 12.03.2006, there was no occasion for the respondent company to doubt any foul play on the part of the petitioner. The learned senior counsel invited attention of the Court to the additional affidavit of the petitioner, producing details of gas consumption, in a tabular form from 24.07.1998 to 11.03.2006 at Annexure-I. The learned senior counsel submitted that the total charges for the gas consumption during this period comes to Rs.2,43,18,532/-. He submitted that whereas, the amount asked for by the respondent company for the alleged theft of gas is Rs.7,74,12,491/-. The learned senior counsel submitted that this amount is asked for by the respondent company by a debit note dated 12.05.2006 and the due date prescribed is 19.05.2006. He submitted that under the agreement, if this amount is not paid within stipulated time then that will lead to 'permanent disconnection'. He submitted that the respondent company has not set out any rhyme or reason for this demand of Rs.7,74,12,491/-. 11.
He submitted that under the agreement, if this amount is not paid within stipulated time then that will lead to 'permanent disconnection'. He submitted that the respondent company has not set out any rhyme or reason for this demand of Rs.7,74,12,491/-. 11. Lastly the learned senior counsel submitted that this is a fit case for the Court to exercise its discretionary power and direct the respondent company to restore the supply of the gas on suitable terms and conditions so as to see that the penalty of 'economic death' is not executed before the same is awarded after lawful adjudication of the matter. 12. Mr.Devang Nanavati, learned advocate for the respondent company submitted that the petition is not maintainable. He submitted that the petitioner having resorted to the arbitration, can file an application under Section 9 of the Arbitration Act asking for similar relief. He submitted that the matter without any scope of doubt or confusion, pertains to 'contract' between the parties. That being so, the remedy lies in appropriate proceedings before an appropriate forum and not by way of writ proceedings before this Court. The learned advocate for the respondent company submitted that, 'no material' is placed on record in support of the submission that, 'the respondent company is enjoying monopoly in the field of supply of gas through pipeline.' He submitted that no such status is conferred on the respondent company by any authority including the Government of Gujarat. He submitted that in fact, the respondent company is a 'subsidiary' of its parent company - 'British Gas'. He submitted that the parent company is holding 65% shares of the respondent company whereas, 35% shares are held by public at large. 13. Learned advocate for the respondent company emphatically submitted that in light of the 'clause for arbitration' in the contract/agreement and more so when that remedy is resorted to by the petitioner, there is no reason for this Court to entertain this petition. The learned advocate submitted that, 'the report of surprise checking at M/s.Nita Dyeing & Printing Works' (the petitioner herein) is at Annexure-III to the affidavit in reply. He submitted that in this report, it is narrated in detail as to what happened during the 'surprise checking.' He submitted that if is clear from the said report that, 'with a well planned mechanism', the theft of gas was being committed.
He submitted that in this report, it is narrated in detail as to what happened during the 'surprise checking.' He submitted that if is clear from the said report that, 'with a well planned mechanism', the theft of gas was being committed. He submitted that diagram at page No.93 of the affidavit in reply shows that, 'the theft was committed by bypassing the metering system.' He submitted that it is not the case of the respondent company that the theft was being committed by tempering the metering system. He submitted that it is also not the case of the respondent company that as the metering system was defective and was recording lesser consumption of gas, the theft was being committed. He submitted that it is clear from the diagram that, 'the entire metering system was bypassed' and hence, the report which is referred to and relied upon by the learned senior counsel for the petitioner dated 12.03 and 31.12.2005, is of no consequence as has no relevance whatsoever. The learned advocate submitted that had it been the case of the respondent company that, 'theft was committed by tempering with the metering system' or that on account of some defect in the metering system, the actual gas consumption could not be recorded, these reports would have been relevant. He submitted that in light of the facts of the case of the respondent company, these reports are of no consequence. As the case of the respondent company in no uncertain terms is that of 'bypassing of the entire metering system' and committing theft of gas, the respondent company has rightly discontinued the supply of gas. 14. Learned advocate for the respondent company invited attention of the Court to the contract/agreement between the parties and particularly Clause No.4.2 which reads as under: "The BUYER shall make all proper and adequate arrangements for receiving GAS at the outlet of GAS Metering Station at his own risk and cost. Should any defect in the BUYER'S intake Arrangements or gas using equipments arise, the same shall be rectified by the BUYER.
Should any defect in the BUYER'S intake Arrangements or gas using equipments arise, the same shall be rectified by the BUYER. The SELLER shall have an option to stop supply of GAS to the BUYER without any notice to the BUYER as soon as any defect or unsafe operation is noticed in the BUYER'S intake Arrangements or gas using equipments ; the decision with respect to which shall be of the SELLER and the same shall be absolute and binding upon the BUYER. The BUYER shall also make provision for DUAL FUEL intake arrangements at his own risk and cost." The learned advocate submitted that it is specifically mentioned in this clause that The BUYER shall also make provision for DUAL FUEL intake arrangements at his own risk and cost. He submitted that in light of this Clause, the argument of economic death penalty' is also not well placed. The learned advocate for the respondent company submitted that besides Clause 4.2 of the agreement, Clause 5.1 also provided that, "the supply of gas would, always be subject to the availability of GAS." He submitted that therefore, submission of the learned senior counsel for the petitioner with a view to invoke sympathy of this Court is not well placed. 15. Learned advocate for the respondent company relied upon following decisions of the Hon'ble the Apex Court: I. Oil And Natural Gas Commission And Another v. Association Of Natural Gas Consuming Industries Of Gujarat And Others, reported in 1990 (Supp) S.C.C. 397, paragraph Nos.17, 18, 19 and 22, page Nos.413 to 418. II. Federak Bank Lid. v. Sagar Thomas And Others, reported in (2003) 10 S.C.C. 733 , paragraph Nos.31, 32 and 33, page No.758. III. State Of U.P. And Others v. Bridge & Roof Company (India) Ltd., reported in (1996) 6 S.C.C. 22 , paragraph Nos.16 and 17, page No.30. IV. ABL International Ltd. And Another v. Export Credit Guarantee Corporation Of India Ltd. And Others, reported in (2004) 3 S.C.C. 553 , Head Note-E, page No.558 and paragraph No.14, page No.566. 16. Learned advocate for the respondent company submitted that the order of the Division Bench of this Court which is relied upon by the learned senior counsel for the petitioner in Letters Patent Appeal No.1209 of 2001 in Special Civil Application No.10238 of 2001 is not a binding precedent.
16. Learned advocate for the respondent company submitted that the order of the Division Bench of this Court which is relied upon by the learned senior counsel for the petitioner in Letters Patent Appeal No.1209 of 2001 in Special Civil Application No.10238 of 2001 is not a binding precedent. In this regard, learned advocate for the respondent company relied upon a decision of this Court in the matter of Parmar Dipubhai And Others v. Registrar Of Cooperative Societies And Others, reported in 2006 (2) GLR 1615 . He referred to Head Note (e) and paragraph No.47 at page No.1649. He also relied upon decisions of the Hon'ble the Apex Court in the matters of State of Orissa And Others v. Balaram Sahu And Others, reported in (2003) 1 S.C.C. 250 , paragraph No.13, page No.257 and M.P.Gopalakrishnan Nair And Another v. State Of Kerala And Others, reported in (2005) 11 S.C.C. 45 , paragraph No.40, page No.62. 17. Learned advocate for the respondent company submitted that the petitioner sent notice dated 15.04.2006, invoking arbitration clause to the respondent company and within two days thereof, filed the present petition on 17.04.2006. The learned advocate submitted that this shows the conduct of the petitioner. He submitted that the petitioner is invoking two remedies simultaneously. He submitted that in this view of the matter, the present petition is not warranted to be entertained by this Court and the same be dismissed. 18. Having considered the rival contentions of both the parties and the decisions cited, this Court finds that the present petition is not maintainable. In view of the aforesaid decisions of the Hon'ble the Apex Court, it is dismissed. Notice is discharged with no order as to costs. 19. At the request of the learned senior counsel for the petitioner, it is clarified that the petition is dismissed, 'as not maintainable' before this Court. The Court has not gone into the merits of the case and therefore, whenever the parties approach either the Civil Court or pursue their remedy before the Arbitration Tribunal, any observations made by this Court in this order, shall not have any influence, one way or the other. Petition dismissed.